–Five reasons why we should eliminate school loans

Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor,
which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive.


Elizabeth Warren may be the best senator in Congress — or at least the most honest. Expect to see her attacked from both sides of the aisle.

She continues to castigate the Obama adminsitration (and she’s a Democrat!) for not punishing the crooked banks (all the big banks are crooked) for criminally defrauding millions of Americans out of trillions of dollars, while continuing to stuff their own pockets.

Naturally, Obama avoids this subject (as do the Republicans) like it were poop in the punch bowl. For politicians, the banks are too big (i.e. too big as contributors) to jail.

Recently Senator Warren and the New York Times have talked about student loans. The Times said:

Student Debt Slows Growth as Young Spend Less
By ANNIE LOWREY, Published: May 10, 2013

The anemic economy has left millions of younger working Americans struggling to get ahead. The added millstone of student loan debt, which recently exceeded $1 trillion in total, is making it even harder for many of them, delaying purchases of things like homes, cars and other big-ticket items and acting as a drag on growth, economists said.

Senator Warren said:

“Right now, a big bank can get a loan through the Federal Reserve discount window at a rate of about 0.75%,”

“But this summer, a student who is trying to get a loan to go to college will pay almost 7%. In other words, the federal government is going to charge students interest rates that are nine times higher than the rates for the biggest banks — the same banks that destroyed millions of jobs and nearly broke this economy.”

“Some may say that we can’t afford this proposal. I would remind them that the federal government currently makes 36 cents in profit on every dollar it lends to students. Add up all of those profits and you’ll find that student loans will bring in $34 billion next year.”

She’s beating the drum, but with the wrong stick.

The big debate in Congress is how much interest to charge students. And there are several complex, convoluted plans afoot. But, the federal government, being sovereign over the dollar, neither needs nor uses profits. It never can run short of dollars. It never needs to ask anyone for dollars — not you, not me, not China, not our students.

It is the U.S. states that are monetarily non-sovereign, so can and do run short of dollars. Nevertheless, they spend billions to support schools, grades K through 12.

For reasons buried in history, no American government supports grades 13+ — at least not full support.

So college attendance — which benefits all of America — has become a widespread hardship. According to the National Memo:

Massachusetts’ senior senator points out that the American public saved the big banks, which Attorney General Eric Holder admitted are “too big to jail.” A Bloomberg report suggests taxpayers offer an implied $83 billion subsidy to the biggest banks, with an implied guarantee in case of another financial crisis.

America’s total student loan debt now totals well over $1 trillion, leading to record defaults. Students stricken by the worst of the financial crisis are now badly in need of a bailout. And Senator Warren is one politician who has a plan to do that responsibly: Just treat students with the same generosity we offer the big banks.

What a concept: Treat America’s future as generously as we treat America’s criminals! (If only those kids were bigger political contributors.)

Anyway, I have a better idea, and it’s much simpler than anything Congress has talked about, — and better for America. For exactly the same reasons public elementary and high schools are free, public college should be free. If the monetarily non-sovereign states can support grades K-12, surely our Monetarily Sovereign government can and should support grades 13+.

monetary sovereignty


Just as private K-12 schools exist alongside of public schools, private 13+ universities can exist alongside of public 13+ universities.

For example, Massachusetts schools like Harvard, Boston University et al could remain private and continue to charge their high-and-getting-higher tuitions, while the five UMass campuses all would be free to every student at every grade level — 100% supported by the federal government.

Just as with grades k-12, those who prefer a private university education could continue to pay for it. Those who prefer a free university education, would have that option.

This would be bad news / good news for the private universities. The bad news is they would have to compete against “free.” The good news is they could feel less obligation to provide scholarships; de facto scholarships for all would be offered at thousands of public universities.

The news for America would be all good:

1. Less financial burden on the U.S. states, which currently provide partial support to state schools.
2. In a world where there is less need for physical labor and more need for educated labor, college education makes America more competitive.
3. Federal dollars, pumped into the economy, will stimulate economic growth.
4. Less financial stress on middle- and lower-income families, to pay for college.
5. Less financial stress on college students to pay for loans.

In the three posts titled, Salary for attending school, Salary for attending school: 2nd paper and Salary for attending school, III, we discussed the reasons for treating school attendance as a job that benefits America.

I suggest salaries would be the 2nd step, with the first step being federal financial support for public universities.

Given that monetarily non-sovereign city and county governments struggle to provide free K-12 education, I cannot imagine any good reason why our Monetarily Sovereign government, with no struggle at all, does not provide a free advanced education.

There is no magic line at grade 12, making it valuable to America while, grade 13 is not. Following food, shelter and health, the two most beneficial gifts we can give our children and our nation, are love and education.

It’s time to stop rationing either.

Rodger Malcolm Mitchell
Monetary Sovereignty


Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports


7 thoughts on “–Five reasons why we should eliminate school loans

  1. [1] Control of education is one way to control society. In centuries past, no one except the rich received any education whatever. Very few peasants could read, while rich children were taught at home by professional tutors. (This was great for religious clerics, since it let them tell the ignorant and illiterate masses, “I will tell you what God says. I am God’s spokesperson.”)

    Then the industrial revolution compelled the rich to let some of the poor have a rudimentary education, so the slaves in the mills and factories could read orders, run machines, and keep the books for the wealthy.

    As technology advanced, the rich were forced to let the peasants have a bit more education, if only to maintain wealthy people’s modern lifestyles. The US government passed laws making it obligatory for citizens to get an education to the eighth grade level.

    After wWW II this got totally out of control. The US government provided the GI bill, and many states (e.g. California) offered free university tuition. President Johnson announced his “Great Society,” plus his “War on poverty.” Meanwhile Social Security still continued. The peasants actually started to think of themselves as “middle class.” It was a CRISIS.

    In the late 1960s, the rich finally began to fight back.

    Today, the only people who can go to college are the rich, and the not-rich who are willing to be lifelong debt-slaves.

    It’s all about power and control.

    [2] I like Rodger’s suggestion of a dual system of private universities and public universities (i.e. federally subsidized). I’d like to see the same thing with banks. Unfortunately the public institutions would quickly crush the private ones, thereby reducing the wealth gap, which is not acceptable.

    Slovenia had public banks, universities, and everything else until Slovenia’s politicians tok Troika bribes and adopted the euro currency in 2008. Now Slovenia is undergoing mass austerity / privatization. I predict that Slovenia will be even more annihilated than Cypress.

    [3] I agree with Rodger’s nine steps to prosperity, but if the federal government paid for 13+ education, what would prevent people from spending their entire lives at school?

    Well, for one thing, we could stipulate that students must maintain at least a C average if they want to stay in college. For another thing, what proof is there that all or most students would spend their entire lives in college? Many of the peasants actually have enterprising ambitions.

    [4] People who favor Elizabth Warren’s bill admit that the Federal Reserve can create limitless loan money on the Fed’s computer keyboard.

    However those same people REFUSE to believe that the Treasury does the same thing!


  2. The president, congress and institutions of higher learning have teamed together to fleece the 99% by conspiring together to create a new class of debt slaves. The institutions consistantly raise tuitions, the government and banks make available greater and greater amounts of loans to those students not wealthy enough to pay the exhorbitant tuitions; thereby burdening them with debts beyond their means to repay. Debts that can’t be repaid won’t be repaid.


  3. along with a job guarantee with a living wage for the people who are not cut out for college(along with singlepayer. It seems crazy to rely on the private sector “job creators” who clearly don’t give a rats ass about creating jobs for the masses.)


  4. then be prepared for the old saw of “that’s not fair! the private sector can’t compete with government. We banks have to make money from loans and we private colleges will lose students. You’re taking money and food and goodies away from us. waaaa.”


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